Looked into NVT recently, so figured I'd share my quick DD with the community. As always, do your own research, this isn't personal advice, yada, yada, yada.
nVent Electric (NVT) is an electrical component manufacturer that owns brands like Caddy, Erico, Hoffman, Raychem, Schroff, and Tracer. If it protects and connects critical electronics and equipment, nVent probably makes it.
The company divides its products into three segments:
- Enclosures: metallic and non-metallic enclosures, cabinets, subracks, and backplanes.
- Thermal Management: heat tracing, floor heating, fire-rated and specialty wiring, sensing, and snow melting and de-icing solutions.
- Elecrical & Fastening Solutions: fastening solutions can range from bridle rings for cable management to clips for securing light fixtures to the ceiling.
Since the pandemic, nVent has steadily increased quarterly revenue and expects momentum to remain strong for the current year, even with supply chain challenges and inflation headwinds.
Why? Because the company benefits from the broader electrification movement. Solar, data centers, data networking, automotive, oil & gas, infrastructure — these industries (and many more) all rely on electronics one way or another. nVent creates the oft-overlooked components that enable safety, constant up-time, and cost-efficiency.
It helps to have a physical tie to the electrification of everything. Here are a few financial highlights:
- Solid revenue growth. 13% increase in revenue in FY21 relative to FY19; pandemic set the company back briefly. Management anticipates 6-10% growth in FY22.
- Prudent management of corporate costs. SG&A is routinely 22-24% of sales.
- 100%+ net income conversion to free cash flow. (FCF of $334 million in FY21)
- Decent forward P/E ratio based on FY22 expectations (15.5, which is below the comparable average for electrical component makers of 20).
Compared to peers, there may be other opportunities with higher upside, such as WIRE and ATKR. (Based on yesterday's close numbers.)
| Ticker | Price | Market Cap | P/E | Revenue (TTM) |
|---|---|---|---|---|
| ABB | $31.79 | $62.06B | 13.9 | $28.9B |
| EMR | $95.89 | $57.13B | 20.9 | $18.5B |
| ROK | $271.05 | $31.63B | 31.6 | $7.3B |
| AME | $132.30 | $30.50B | 31.1 | $5.5B |
| GNRC | $296.96 | $19.14B | 35.8 | $3.7B |
| RRX | $138.47 | $9.32B | 31.5 | $3.8B |
| ST | $48.25 | $7.66B | 21.2 | $3.8B |
| NVT | $34.32 | $5.66B | 21.3 | $2.5B |
| ATKR | $90.24 | $4.05B | 6.1 | $3.3B |
| ENS | $71.52 | $2.98B | 20.6 | $3.3B |
| WIRE | $106.55 | $2.11B | 4.1 | $2.6B |
| AZZ | $47.19 | $1.19B | 15.2 | $873.6M |
| AMOT | $27.38 | $424.3M | 16.5 | $403.5M |
| PLPC | $62.74 | $312.98M | 8.7 | $517.4M |
That said, shares currently trade at $34.50, representing a PE ratio of 21.5. Looking ahead, NVT trades at 15-16x forward earnings for FY22, which suggests — all else equal — there’s a chance for NVT to hit mid-$40s over the next year.
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